Notes on Web 2.0 Expo

July 20, 2007

This April, I attended the Web 2.0 Expo in San Francisco. For those who haven’t heard of it, the Web 2.0 Expo is organized every year (for the 4th year running) by O’Reilly Media – the firm that coined the term Web 2.0. The conference was a week long and hosted some of the most prominent speakers in the world of the internet. Worthwhile? Well, I decided to let you take a view on that by sharing the key learnings from the conference with you (and if you find them self-evident,  well at least you didn’t have to fly 12 hours for them !! )

So here goes (split into the following chapters). The notes were left in the original rough-cut format that I composed them so apologies if there are things that aren’t clear (if so please do email me on xenios@peopleperhour.com and I will try to help )

1. on Web 2.0: what the hell is it ?

–          a lot of confusion and misinterpretation. People defining it as a world of wikis, widgets, communities, networks,  user-generated content etc etc
–          ultimately it’s about people on a website. If you remove them from a web 2.0 site you have nothing. In a conventional site your product is still there regardless if you have 1 user or 1 million users
–          communities Vs networks: a community is a place where people go for a reason i.e. to do something. Web 2.0 is the emergence of a set of tools that allows those people to network within those communities, exchange information, and collaborate
–          It’s not black and white even if a site is not fully Web 2.0 these days, some of the Web 2.0 features can and should be used to enhance the user experience on the site and capture the long tail. People are important on ANY site !

2. on design and development
–         a new design paradigm: hierarchical, top-down, linear design with heavy specs is now obsolete. Gives way to agile iterative design
–          less documentation; more iteration ~
–          not always a big picture from start. We are seeing more emergent systems built from the bottom-up. Features defined in small chuncks; rapid prototyping, time-boxed development, leading to testing and then redevelopment
–          the era of the Beta: everything is beta and stays a beta: cyclic development and continuous improvement. Consumer is now more forgiving: ‘quick and dirty’ approach: just get it out there and don’t wait for it to be perfect
–          emergence of the hybrid designer
–          lots of methodologies on design: common denominator is closed-loop, dynamic cycles, with brainstorming leading to rapid prototyping, testing and then continuous improvement
–          emergence of new environments, platforms, operating systems  and languages that accelerate the above: Ruby on Rails, Solaris, Django
–          open-standards make this easier also: there are now suites of APIs and mashups that are readily available e.g. www.programmableweb.com  Designers need to be aware of them to deploy them to their advantage
–          reduced need for heavy-duty infrastructure and hardware: eg Amazon EC2 services for developers and start-ups
–          increase in offshore development and ‘virtual teams’: problems with communication but gradually being sorted out  

3. on prototyping

–          rapid prototyping is key to the above
–          tools for the above are now increasing: Visio, Plone, Zope, Wuufu, Django, Axure. Adobe Fireworks,
–          importance of usability and user-centric design (UCD)
–          usability testing with a pinch of salt: results often distorted. Use it to weed out the stinkers

4. on measurement, testing and iteration

–          importance of Web analytics: lots of packages out there including Google Analytics
–          Multivariate testing: Optimost, Site Spec, Offermatica, Google Website optimiser

6. on Features

          emergence of an ecosystem with open-standards and APIs, facilitating  rapid deployment, exchange of knowledge & DIY approach
–          communities emerging from features: lego approach: building communities with features upwards
–          tagging, blogging, bookmarking, podcasting
–          APIs & mashups: www.programmableweb.com e.g. wrapleaf.com (online reputation system)
–          Widgets: www.widgetbox.com ; www.widgify.com ; www.clearspiring.com
Design of widgets does make a difference: optimum design: profile/ post (150 x 300 px)

8. on start-up & funding

–          start-ups becoming a lot more capital-efficient as the ecosystem is developing: a drastic drop in the amount of capital needed to get off the ground
–          Some average stats / trends :

  •  
    • $20k – $200 k to build a website
    • Average $1.5m fixed cost base (assuming 8 employees)
    • Relatively easy to break-even but very difficult to get to significant size ($500m is min. for Plc size). Big gap in the middle
    • More and more start-ups deploying a bootsrapping approach
    • VC model changing: small amounts, more early stage  
    • Seed capital: allows you to validate initial assumptions: $100 k – $500k
    • Series A: scale-up $5 – $8 m
    • Series B: ca.  $20 m
    • Exit: lots of deals happening on the $5 – $10 m mark. Very few deals happening on the $100m mark and they all seem to be acquired by a handful of players. This constrains how much money you can raise: to make 5x on exit you can only raise $1m unless you are truly scalable. Chasm in the middle 

–          VCs becoming more receptive to ‘paying out’ founders at spin-out stage
–          Optimum team is 2 people: one business and one technology

7. on PR & Marketing

–          PR 2.0 : use of blogs and online media to promote
–          Offline PR still very important e.g. case-study of Prosper.com (got most of their traction from PR)
–          Emergence of DIY approach: lots of free tools out there to help get traction: Podcasts, You-Tube,. Google News. Google Base, Google Catalogs, widgets
–          Everyone should be making the most use of these free tools to improve traction; but very few people actually are ! 

8. on business models

–          Web 2.0 still quite fickle as far as monetization is concerned. Not a great variety in monetization avenues
–          Broad versus Verticals. Different funding requirements
–          Two predominant models: Media business (advertising), E-commerce. Third is Marketplaces. Some subscription models as well but not as many
–          Media. All about CPMs. CPMs have been stable

1.      Broad CPM = $0.5 – $2 e.g. My Space ($0.52), Netvibes, Youtube, Twitter 

2.      Demographic CPM = $1 – $5 e.g. Facebook  ($1.03), Asmallworld

3.      Endemic Advertising CPM = $10 – $40 e.g. Fandango ($41.67), Flixter

–          Endemic sites are becoming more and more important. Strong emphasis on content to facilitate a purpose e.g. Flickster, Fandango
–          More vertical opportunities to exploit, harder to be successful if you are broad – need to depend on stringer technology  e.g. Youtube
–          Average Revenue Multiples 3.8 x for Media, 1.8 x for e-Commerce
–          E-commerce: still quite a few niche verticals where it’s easy to make money and get to break-even. Challenge is always in scale-up

9. on the new NEW  thing

–          emergence of the webtop. Convergence with desktop
–          offline synchronization: APPOLO by Adobe. (alpha phase) www.adobe.com/go/apollo
–          ethics, copyright issues, morality on the web
–          mobile: still many opportunities. not a reflection of the web but an extension of it
–          the big question: who will fill the remaining 8 slots in the billion dollar mark ?? ca. room for 20 slots. 12 of which are taken !
–          the other big question: must everything on the web be 2.0 these days? Is this the death of 1.0 or 1.5 ? No, but almost every site should maxise the opportunity to utilize these tools to bring their people together and create a community that strengthens their purpose, whatever that may be.

  
 

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One Response to “Notes on Web 2.0 Expo”

  1. Cody Says:

    Hey.. that was great detail of what exactly web 2.0 is and should help out with a lot of the confusion…

    Sincerely, Cody Goodman

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